India’s latest solar auction, one of the biggest in the country, drew a surprisingly enthusiastic response with a big chunk of the 1,500 MW of projects on offer won by a state-owned mining company.
The lowest bid in the auction in Tamil Nadu, where solar radiation is weaker than in Rajasthan, came from Bengaluru-based Raasi Green Earth Energy, which won 100 MW at Rs. 3.47 per unit, according to a list of official winners provided by one of the successful bidders. Officials of the Tamil Nadu Generation and Distribution Corp., which invited the bids, could not immediately be reached for comment.
Bids were invited in May and the results were declared on Friday. The corporation got a good response this time after two of its previous tenders were undersubscribed.
“The interest in the 1,500 MW tender was largely due to pent up demand,” said Raj Prabhu, cofounder of Mercom Capital Group, which tracks the Indian solar segment. The tariff of Rs. 3.47 is well above the lowest solar bid in the country so far of Rs. 2.44 per unit, made at an auction at the Bhadla Solar Park in Rajasthan in May, but it is a substantial drop from the winning bid of Rs. 4.40 per unit at Tamil Nadu’s auction in February.
Apart from weaker radiation in Tamil Nadu, developers have to find land for their projects, unlike Rajasthan’s Bhadla, where companies had assured land. There were 18 winning bids among the 25 put in for the latest Tamil Nadu auction, at tariffs varying from Rs. 3.47 to 3.97 per unit. The tender states that all winners will have to agree to sell the power at the lowest tariff reached or opt out.
The biggest winner was public sector mining giant NLC India (formerly Neyveli Lignite), which had bid for the entire 1500 MW, but was awarded 449 MW. The company mines lignite, which is also called brown coal, and generates power.
Coal miners in India are concerned about the challenge from green energy and looking for ways to diversify. Coal India, also state-owned, is seeking services of a consultant to prepare for the future as it faces uncertainties due to its carbon footprint and the government’s commitment to the Paris accord on climate change. The response to the tender is encouraging because solar projects in Tamil Nadu have been plagued with problems.
“Tamil Nadu has been struggling to generate interest in its solar tenders due to its reputation for curtailing power and inconsistent payments,” said Prabhu of Mercom.
These factors were responsible for the poor response to the two earlier tenders. Even in the latest auction, most big solar developers stayed away, the exceptions being NLC India, ReNew Power, which won 100 MW, Shapoorji Pallonji Infra, which sought just 50 MW, and Rays Power Infra, which got 200 MW.
“Now that it has got bids at a price it wanted, it will have to be seen how Tamil Nadu executes from here and whether it can regain the confidence of the solar industry,” said Prabhu.